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How to grow your wealth while going cashless: 'Create a specific, exciting vision of your goal'

Put yourself in control by actually seeing how you're spending your money.

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Over the last year, the pandemic has led to an increase in cashless spending. The number of cashless businesses in the United States has more than doubled in 2020, according to new data from financial services company Square. By the end of February 2021, 74% of Square sellers were accepting contactless payments, up from 64% the year before.

The company estimates that under more normal circumstances, this kind of growth would have taken place over three years.

But as more cashless options become available, the ease of use might have an unintended effect on how much you are spending and could make it tougher to stay on top of your saving goals. "It's a fairly common experience where you're spending with a credit card or you're tapping [on a device], a lot of times people leave the store and they have no idea how much money they spent," says Brad Klontz, a certified financial planner and financial psychology professor at Creighton University.

You can use touchless payments while also building your wealth, though, experts say. "Create a specific, exciting vision of your goal" to help you stay on track, for example, says Klontz.

Here are a few simple habits to build that can help.

Visualize specific, exciting goals

One way to grow your wealth is to make your objectives emotionally stimulating, says Klontz. "The clearer you can be, the more likely you are to engage that animal brain."

"For example, 'retirement' is an amorphous, unspecific thing that could mean a lot of things to a lot of different people," says Klontz. To avoid not having enough money when the time comes, it helps to create a clear and inspiring vision of your goal.

Naming your accounts can be part of that effort. "My son's name is Ethan, and if I have Ethan's College Fund, I'm never going to rob that fund, because I have to I have to go through this mindset of 'I'll just take from his college fund,' and I feel like I'm stealing from his future," says Klontz. "I'm never going to do it. If it's a savings account, I'll rob from it all day long. If it's European Vacation 2023, that's exciting. Adding the name creates the visual imagery and creates the emotional experience when you look at it."

Klontz did a study where half the participants attended a financial education seminar with talks about financial health and financial planning, and the other half created financial-goal vision boards, took the boards home and showed them to a friend, and used the boards as wallpaper on their phones.

After three weeks, the education group showed a 22% increase in their savings. But, "the group that I had create that exciting vision, they increased their savings rates by 73%," says Klontz.

Develop 'increased consciousness around your spending'

Many of our decisions are made by our "animal brain," Klontz explains. That is the emotion-driven part of our brain that responds best to concrete, tangible concepts, like a stack of $20 dollar bills. If "you go into the store and you start laying them down," he says, "it's almost like counting your calories. All of a sudden you have increased consciousness around your spending, and we have a tendency to self-correct when we're conscious."

When our payments are more abstract, we become more vulnerable to overspending. "The more concrete you can make it, the more power you have over your spending," he adds.

If you are not using cash, Klontz recommends using technology to help you stay more aware, like adding a budgeting app to send you alerts if you are going over your limit.

The more concrete you can make it, the more power you have over your spending.
Brad Klontz
certified financial planner and financial psychology professor at Creighton University

'Understand where your money is going'

If you are setting new saving goals, tracking your your past spending is crucial when you're getting started, says Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth in New York City.

"If your goal is to be able to save a certain amount of money consistently every month, you first need to understand where your money is going, and whether you can afford to save that much money every month based on the type of lifestyle you want to live," he says. "If you want to put yourself in control, the goal here is to number one, see how you're actually spending your money."

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Having your real spending data in hand can help take the emotion and subjectivity out of your money decisions. For example, you may want to put $1,000 every month towards a down payment on a home. But if you're only able to save $750 a month with your current expenses, now you know to change your budget to find that extra $250.

"You can say, 'Maybe I won't be going out for dinner one more time on the weekend. Maybe I won't be doing this activity every month,'" says Boneparth. "'There's my $250. I could live with that, because the goal of buying a house is so much more important that dining out and that one activity.'"

Automate your savings and investments

"There's a part of this at the end of the day that's really just self control and discipline," says Boneparth. "But you can get that by putting systems in place."

This is where making transfers automatic can be your best friend. "You want to automate as much as possible," says Boneparth. "The ability to move a consistent amount of money out of your checking account to a savings account or investment account is going to go a long way."

If you want to put yourself in control, the goal here is to number one, see how you're actually spending your money.
Douglas Boneparth
certified financial planner and founder of Bone Fide Wealth

For example, you may be able to schedule your paycheck to go into different accounts after you get it via direct deposit, or set up automatic transfers between your checking and savings accounts. And you may be able to automate regular contributions to your retirement account via your company's 401(k) plan, which could include some company matching — essentially free money. 

Once you automate something, you're more likely to let it sit so that your contributions and savings build up, adds Klontz. "That is really the key because we have a status quo bias," he says, a mindset where we tend to feel comfortable leaving things the way they are.

"How many people have had a gym membership and you kept it six months too long because to change it you have to sit down and say, 'OK, working out at that gym is no longer important to me,' says Klontz. "So you might as well take that and harness it towards your goals, because you'll be unstoppable if you do that."

Be patient and give yourself a chance to let the healthy habits sink in, says Boneparth. "It's not very complicated from a mathematical point of view, it just takes time. You get better at this stuff over time."

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